Get ready for pushback in the war on plastic

Petrochemicals are becoming increasingly important to the oil industry as cars go electric.

The fossil fuel industry’s lobbying has been effective in Washington, slowing efficiency improvements for cars, rolling back light bulb regulations, and so much more. But the rise of the electric car is expected to put a big dent into demand. According to the International Energy Agency (IEA), this will put more emphasis on petrochemicals, which now use 15 percent of fossil fuels as their feedstocks, but is expected to rise to 50 percent by 2040. According to Tim Young in the Financial Times,

It is the only major source of oil demand where growth is expected to accelerate. These forecasts assume a steady, strong demand for plastic will translate into increasing consumption of feedstock. They provide a rare ray of optimism for the oil industry against increasingly dire long-term predictions that growth of other demand sources will slow.

So what happens if the war on plastics catches on? Big trouble. Just reduced demand for plastic bags and increasing recycling from 5 to 25 percent could change all these projections and investments in new capacity.

Using the IEA World Energy Outlook as a benchmark, these two modifications would diminish oil demand from petrochemicals in 2040 by more than 20 per cent. It could bring projected peak oil demand forward by a decade and diminish the need for oil-based petrochemical production capacity by 20 per cent. The dent in oil demand by 2040 would exceed the one that the IEA predicts would accompany the introduction of electric cars.

Tim Young thinks this will make a big dent in the industry, and that “if companies push ahead with investment based on standard forecasts to expand petrochemical operations, stranded assets may lie ahead.” I wonder if he underestimates the ingenuity and power of the oil industry.

Throwaway Living/Screen capture

We have seen this movie before, where the fossil fuel industry essentially created demand by their petrochemicals by promoting a linear economy of disposable plastics – similar to how they now are promoting waste-to-energy because it keeps them in the feedstock business; how Keurig has taken over the coffee world; how big money is now being invested in the food delivery business, almost all of which comes in single-use plastic.

While municipal bag bans, the zero-waste movement, and anti-straw campaigns are miniscule when faced with the construction of multi-billion-dollar petrochemical facilities, remember that these alternative movements are far more noticeable than they were only five years ago – or even a decade ago, when they didn’t exist yet. The anti-plastic movement will grow, slowly but steadily, until these companies cannot help but pay attention.

But we are up against the biggest, most powerful industry in the world, which will keep developing ever more convenient and attractive ways for us to use more and more plastic. Anyone for Uber Eats tonight?

If society want less plastic bottles, bags, etc., it will vote for politicians who will support taxes on oil.

It might even make good financial sense to have a big and growing ecological tax (for CO2, pollution, etc.) on oil, and reduce income taxes, instead.

Promoting productivity and hard work, and punishing messing up the planet SHOULD make lots of sense. (Not that far left liberals are likely to be objective about that).

But if you want to financially incentivize people to use lots less throw-away plastic, it’s not a complex task.

OTOH, since people WANT the convenience such products offer, good luck getting the policy change made.

I’ll predict the comments here are likely to bear out my point.

makati1 on Thu, 21st Feb 2019 5:57 pm

I love these projections into the far future. Such bullshit! Not one person knows what tomorrow will bring. They certainly don’t know what 2050 will be like. How many in 1988 knew what it would be like today? Zero. Just guesses, usually to sell something. $$$$

Anyone can take a chart of historic numbers and draw a straight line from that, but to call it a sure thing is delusional. But then, a lot of those who read such bullshit are deluded anyway, so they would not notice. By 2050, we will likely not be buying much of anything we do not need (food/clothing/shelter), including plastics. LOL

Pete Bauer on Thu, 21st Feb 2019 6:46 pm

I think the share of petrochemicals (including plastics) in oil has increased from 6% to 8% between 2014 & 2018. One of the reason is that the oil usage in power gen and heating is declining.

Meanwhile the war against plastics is raging bit time. So the oil companies dream of increasing the plastic usage wont last long.

Also the bio plastics usage is increasing, so the oil usage in plastics will stall soon.